A large corporation with offices and employees located throughout the world, has a significant need for travel services and large companies and organizations typically purchase a significant amount of travel services from a number of different airlines (or airlines). On any given day, a large company may have hundreds or even thousands of employees traveling from one location to another. Although these employees may travel throughout the world, significant travel also takes place between office locations such as the headquarters, manufacturing plants, distribution centers, and/or the like.
Because of the high volume and frequency of travel, large companies are often able to negotiate special rates and discounts with the airlines. In this regard, it is common for large companies to enter into travel contracts with several airlines. However, unless properly negotiated and drafted, these contracts may not always save the company money. Although a particular contract with a particular airline may provide a negotiated savings for travel between certain times, to certain locations, the inconvenience and contractual obligations may result in a decreased savings over time because of, for example, employees missing flights with the negotiated airline and purchasing last minute flights on non-contract airlines.
Corporate contracts have evolved over the last several years as an advanced form of a “frequent flyer program” aimed at increasing corporate, rather than individual, loyalty. For example, airlines may offer monetary savings on standard published fares in return for the corporation's loyalty and “preferred airline” status. Moreover, a corporation may have a complex portfolio of contracts in place. Corporate contracts may have different scales of geographical coverage (depending on the airline and the size of the corporation), varying degrees of route complexity and a stipulated method of tracking the performance of the contract. For example, large multinational companies with annual air travel expenditures in excess of $15 million may have between three and five corporate airline contracts in place in an attempt to achieve maximum savings.
In general, two exemplary types of corporate contract savings include: (1) rebates and (2) up-front discounts. “Rebates” involve the airline providing a refund in accordance with the amount of business with the airline generated by the corporation. The size of the rebate generally depends upon the “trigger” threshold level achieved by the company. The “trigger” may be represented by price volume, sectors flown, an agreed percentage market share or a number of other factors. “Up-front discounts” generally come in two forms, “net fares” and “agreed percentages.” Net fares are typically fixed, discounted fares offered on specific routes in a specified class of service (e.g., Business Class, London Heathrow to New York, JFK). Agreed percentages are typically fixed percentage discounts on a particular group of fares (e.g., 25% discount on all fares in Business Class from the United States to the UK).
In addition to the discounts on air travel, some airlines offer “soft” benefits aimed at the corporate employee's comfort such as, for example, priority check-in, fast-track security, limousine services, access to lounges/shower facilities, free upgrades/priority seating, and free transfers from airport to city center. Thus, the “soft” benefits may help ensure traveler satisfaction and compliance with the contracts of a preferred airline.
Depending on the specific airline involved, travel contracts also typically stipulate a preferred method of contract tracking, such as, for example, the corporation providing monthly management information on company travel patterns (often provided by the company's travel agent) or by the airline monitoring the contract internally. This tracking of travel contract activity generally utilizes a designated “tour code,” a corporation-specific code which appears on all qualifying tickets purchased.
In light of the rebates, discounts, and soft benefits, the principal goal for corporations is usually to get the most travel services for the minimum expenditure. Several factors help to determine the net cost savings to the company. Traditionally, companies have attempted to take into account a variety of conditions to optimize their travel needs to negotiate better cost savings. Examples of some of these devices and methods include (1) U.S. Pat. No. 5,832,453 (“Computer System and Method For Determining A Travel Scheme Minimizing Travel Costs for An Organization”) issued on Nov. 3, 1998 and assigned to Rosenbluth, Inc. and (2) U.S. patent application Publication No. US 2001/0034626A1 (“Tool for Analyzing Corporate Airline Bids”) published on Oct. 25, 2001; the contents of which are incorporated herein by reference. The '453 patent generally describes a system and process that attempts to determine a travel scheme to minimize travel costs for an organization. More particularly, the '453 patent relates to a linear programming model that takes into account various conditions and constraints in an effort to determine the minimum travel costs for any particular company during any particular period of time. The system and method described in the '453 patent is limited, however, in that the programming algorithm uses a simplified linear programming model (e.g., an objective function analyzing particular sets of travel information constraints) and only a few available input parameters. The system described in the '453 patent is further limited in that once an optimal contract model is determined; there are no provisions for implementation, execution and follow-through using the contract terms. In other words, even though a theoretical optimal calculation may be obtained, in reality, it is the travel counselors who typically verify adherence to the contract provisions and limitations.
A recently filed application, U.S. application Ser. No. 10/127,483 filed on Apr. 22, 2002, entitled “System and Method for Travel Airline Contract Management and Optimization” has resolved many of the foregoing problems by creating a system and method of analysis and optimization that more accurately reflects the complex and real-life variables which are common-place in today's airline industry. However, there remains the problem of properly implementing and executing these optimized airline contracts so that the corporate corporation realizes the calculated savings. To be a successful corporate travel contract, the contract must be provide “best in class” terms in regards to travel pattern coverage, achieving savings and content, while being well-communicated both internally and externally and complied with by travel counselors and corporate travelers. In other words, although an optimal solution may be calculated that achieves maximum savings, these savings are not realized until the solution is properly implemented and executed by travelers and travel counselors utilizing the preferred airlines at the correct time in the correct market sector. Although various programs have attempted to optimize airline contracting, a need still exists for proper management (i.e., implementation, execution and tracking), so the corporation may realize the calculated savings.